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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with

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Speaker 1: David Gura. Daily we bring you insight from the best

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Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance

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Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,

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Speaker 1: on the Bloomberg Well the morning on a Wednesday, the

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Speaker 1: twenty three of August, This is Bloomberg Surveillance on Bloomberg Radio,

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Speaker 1: David Gura in New York. Tom Keine's well deserved summer

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Speaker 1: vacation continues. Carol Masser joins me today in our Bloomberg

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Speaker 1: eleven three oh Studios, a voice you're no doubt accustomed

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Speaker 1: to hearing in the late afternoon. We've made her wake

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Speaker 1: up early today to join us on Bloomberg Surveillance. For

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Speaker 1: that's the trick Tom Keene taught me that early on.

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Speaker 1: So much to talk about today. President Trump speaking for

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Speaker 1: more than an hour last night at a rally in Phoenix, Arizona,

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Speaker 1: and we saw the market move quite a bit as

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Speaker 1: he threatened to rip up NAFTA, the North American Free

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Speaker 1: Trade Agreement. He talked about the debt limit. He said

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Speaker 1: if lawmakers were to refuse to fund a wall along

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Speaker 1: the US Mexico board or something he talked about from

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Speaker 1: time to time on the campaign trail. You might remember, uh,

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Speaker 1: he would he would not raise the debt limits, something

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Speaker 1: Congress is gonna be charged with doing as soon as

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Speaker 1: they get back to Washington in early September. So he uh,

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Speaker 1: he went off script. Shall we say, and as I said,

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Speaker 1: the market move. Let's take a quick check of the

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Speaker 1: data this morning. Looking at Dollar Mexico this morning at

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Speaker 1: seventeen seventy eight, we saw the pace a weekend on

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Speaker 1: those remarks from President Trump last night. D x y

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Speaker 1: right now at eleven futures right now down five at

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Speaker 1: down futures, down thirty three. Looking at Sterling right now

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Speaker 1: one ten. We're expecting a new position paper, Brexit related

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Speaker 1: position paper this morning on the European Court of Justice,

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Speaker 1: something that's been highly anticipated. Emma Ross Thomas or beer

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Speaker 1: Chief in London. It's going to join us in just

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Speaker 1: a little bit to talk about that waiting to come

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Speaker 1: out on Netflix. You know, she was on television with

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Speaker 1: us and I asked her, Carol, just sort of a

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Speaker 1: about the the import of these documents, because from what

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Speaker 1: I gather, what I've read here, um, Prime ministerarch Reason

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Speaker 1: has backtracked a bit on what she drew as a

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Speaker 1: redline during the you know, during the early stages of

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Speaker 1: Brexit here about the degree to which the European Court

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Speaker 1: of Justice would have jurisdiction over the UK. Uh. And

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Speaker 1: it seems to me like this is a starting point

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Speaker 1: for negotiations so that they continue both uh, internationally and domestic. Well,

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Speaker 1: Brexit has been fascinating to watch, right, the wishes and

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Speaker 1: the expectations of what you want in this changing environment

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Speaker 1: over in the UK, and then the reality of how

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Speaker 1: it all plays out. Right, there's lots of voices, lots

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Speaker 1: of moving parts, and so we're still waiting kind of

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Speaker 1: for what the reality of what Brexit will be for

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Speaker 1: the UK moving forward. Yeah. Absolutely, And a couple of

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Speaker 1: guests this morning telling us that they think that the

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Speaker 1: Brexit processes maybe two to three months behind a schedule.

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Speaker 1: Of course, that deadline looms here just a few months

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Speaker 1: away from from now. Uh and uh, yeah that that

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Speaker 1: that dovetailing with domestic politics, there's a ton to talk about.

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Speaker 1: Garry Shilling joins us now. He of course is the

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Speaker 1: president of a Gary Shilling alway get great to get

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Speaker 1: his insights from time to time. As we look ahead

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Speaker 1: here to Jackson Hole, that big FED conference scheduled to

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Speaker 1: kick off this afternoon. Are called like Michael McKee out

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Speaker 1: there with Gina Smile, like who covers the economics force

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Speaker 1: at Bloomberg News. They'll be doing a series of great

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Speaker 1: interviews as that conference gets underway. Gary Shilling, great to

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Speaker 1: speak with you. Thanks for doing TV and radio this morning.

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Speaker 1: What are you gonna be listening for as policymakers gather

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Speaker 1: in Wyoming at the foot of the Grand Titans for

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Speaker 1: their conference again kicking off this afternoon. Well, we're obviously

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Speaker 1: listening to see if they say anything different, I mean dragging.

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Speaker 1: May may say something about about backing down on kuee. Uh,

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Speaker 1: we may get a more definitive timetable from yelling on

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Speaker 1: when they're going to start reducing their portfolio. Uh. Obviously

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Speaker 1: some discussion of where they think the economy is and

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Speaker 1: how they're going to react in terms of policy. But

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Speaker 1: I'm not sure we'll see any huge differences, just more

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Speaker 1: more firming up. The sort of message they've been delivering

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Speaker 1: in central banks are basically they do want to raise

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Speaker 1: interest rates they do want to reduce their portfolios are

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Speaker 1: in the case of of the e C b uh

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Speaker 1: cut back on QUEI, but they want to do it

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Speaker 1: very gradually. They don't want to have another taper tantrum

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Speaker 1: like they had in so they've they've given a lot

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Speaker 1: of a lot of signals, if you will, And I

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Speaker 1: think it's just sort of an idea of flushing out

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Speaker 1: a little more, make it a little more definitive of

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Speaker 1: what they may what they may be planning. But I

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Speaker 1: wouldn't think we'd get any dramatic changes. Gary. If we

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Speaker 1: look at the Fed's mandate, right, they're watching the labor market,

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Speaker 1: they watch inflation. If you do that labor market check,

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Speaker 1: looks pretty good. Inflation. We don't seem to have any

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Speaker 1: worries about that as well. They'd like to actually see

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Speaker 1: a little bit more inflation. Why is the FED being

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Speaker 1: so hesitant? Is it just a case of managing investors

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Speaker 1: managing the market? Yeah, probably that they've they've really got

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Speaker 1: themselves hooked into this forward guidance deal. If you look

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Speaker 1: back at the financial crisis, a lot of that occurred

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Speaker 1: because there were things that were not known, and transparency

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Speaker 1: became the order of the day. As a result, Well,

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Speaker 1: central bankers are mere mortals, and they were infected by

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Speaker 1: the transparency bug, and that in their case became forward guidance.

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Speaker 1: So I think they felt that that this was a

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Speaker 1: way to UH to really inform everybody. Now I mentioned

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Speaker 1: we we did a study that showed that that back

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Speaker 1: in in UH when they had no forward guidance and

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Speaker 1: they FED raised interest interest rates from three percent to

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Speaker 1: six percent a matter about seven months, markets were actually

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Speaker 1: less volatile then than they have been since December when

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Speaker 1: they have had forward guidance and raised interest rates only

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Speaker 1: only a hunter basis points. So I don't think it's worked,

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Speaker 1: but I think they somehow feel that they're doing their

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Speaker 1: job if they tell everybody well in advance what they're

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Speaker 1: gonna do. I do wonder, you know, David, I think

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Speaker 1: about times I used to come in and the FED

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Speaker 1: would totally surprise you early in the morning by doing policy.

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Speaker 1: How they lost their efficacy by not by by being

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Speaker 1: so yeah, sure, oh sure, you know. I think you'd

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Speaker 1: go back to William and Chresny Martin. He was one

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Speaker 1: of these guys who said, you know, the Fed's job

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Speaker 1: is to take away the punch bowlers. When the party

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Speaker 1: gets rolling, and back in those days, they did enjoy

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Speaker 1: that sort of shock value and the unknown as to

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Speaker 1: what they were gonna do. And you know, you can

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Speaker 1: get too familiar. I mean, it's it's okay for lovers

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Speaker 1: to be familiar, but sometimes for the rest of us,

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Speaker 1: you don't want to be too close to the dark.

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Speaker 1: After dark, after dark, A little little lightness here in

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Speaker 1: your morning. Love it? I love it. Brought to by

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Speaker 1: Dashtional Realty Managers of New York, New Jersey, Philadelphia and

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Speaker 1: Florida cash Flow real Estate offering safe, high yield cash

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Speaker 1: flow property units. See them at nmr i a dot net. Gary.

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Speaker 1: Let me just ask you about the goings on in Washington. Uh,

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Speaker 1: there's been a lot of talk about the prospects for

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Speaker 1: tax reform. You and I spoke a few months back.

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Speaker 1: I think I can characterize your your sense of word,

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Speaker 1: things were headed as pessimistic when it comes to to

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Speaker 1: Washington policy. How have you reevaluated things here as the

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Speaker 1: year has has war on. Do you think that we're

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Speaker 1: going to see tax reform in in two thousand seventeen

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Speaker 1: or two thousand and eighteen. Probably not in a substantial way.

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Speaker 1: We're certainly due for it. You know, you go through cycles. Um,

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Speaker 1: you get very very uh, you get tax reform like

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Speaker 1: we had a nineteen eight six And I remember at

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Speaker 1: the time thinking, boy, this is wonderful. And I talked

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Speaker 1: to a guy named Barbara Connabal, who was the ranking

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Speaker 1: Republican on the House Waves and Mees Committee, later head

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Speaker 1: of the World Bank. Unfortunately he's dead now, but but

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Speaker 1: he uh, he said, don't get excited about this, because

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Speaker 1: I said, we're finally getting your sense. You have tax reform,

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Speaker 1: he says, because almost everything we do in Congress for

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Speaker 1: our constituents involves the tax code. And he took me

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Speaker 1: a new his inner office, had his had his staff, dragon,

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Speaker 1: two big males X and we sat there for for

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Speaker 1: an hour opening the letters, and they all said the

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Speaker 1: same thing. First paragraph, dear Representative Accountable, you're doing a

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Speaker 1: great job in reforming taxes, simplifying and getting Gomer under control.

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Speaker 1: Paragraph too, I know you're gonna back and vote for

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Speaker 1: that Rivers and Harvard project in our town. And and

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Speaker 1: and so you go through these cycles. Now we're about

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Speaker 1: to do for massive tax reform because things have gotten

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Speaker 1: so complicated. It is cyclical. But unfortunately with the uh,

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Speaker 1: divisions in Congress, even even you know, even with the

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Speaker 1: Republicans and the in the in the White House. You

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Speaker 1: kind of say, is there is there enough momentum that

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Speaker 1: it's going to happen. What's the tax reform we need though? Gary?

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Speaker 1: Is it in a case of a less complicated tax

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Speaker 1: system or is it lower taxes? Which is it? Oh?

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Speaker 1: I think it's a less complicated tax system more more

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Speaker 1: than anything else. I mean, I'm not sure that lower

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Speaker 1: taxes have a great, great impact. You know, there is

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Speaker 1: this this argument that people work harder if they get

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Speaker 1: more of what's left. But I'm not sure that the

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Speaker 1: evidence of that is all that clear. And not that

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Speaker 1: I want to pay more taxes, believe me on lower

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Speaker 1: taxes personally, but but as a as a looking at

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Speaker 1: it as a professional forecaster, I'm not sure it's that.

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Speaker 1: But tax simplification because because it just storts it's the

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Speaker 1: storage business and personal decisions. Uh. In other words, if

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Speaker 1: you have a tax code that favors um, that favors

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Speaker 1: a capital spending on one particular area, you're going to

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Speaker 1: get alot of that. Now, whatether that is? What's in

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Speaker 1: the best interests of productivitying the economy is another question.

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Speaker 1: So it's it's simplification more than anything else, and and

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Speaker 1: that brings trust. You know, people have more trust in

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Speaker 1: government if they feel that that they're all being treated

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Speaker 1: for transparency. Transparency, great baby, Thanks again for taking all

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Speaker 1: the time this morning, appearing on Bloomberg Surveillance on television,

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Speaker 1: Blimberg Radio, as well as salad dressing. Recently with your

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Speaker 1: honey by the way, we were just talking, you've just

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Speaker 1: done a harvest here. Yeah, that's right. Try we take

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Speaker 1: off the honey in August because you've got to get

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Speaker 1: medications on and obviously you don't want to put those

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Speaker 1: on the highs. Well, the honey's on there that we're

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Speaker 1: going to eat, so we take off the honey and

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Speaker 1: we had a it was a good but not spectacular

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Speaker 1: a year. It was it was a cold, wet spring

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Speaker 1: and the bees don't like to fly. Saying about the

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Speaker 1: markets that harvest, well, you know, we we had a

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Speaker 1: pretty good correlation between the market action and and uh

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Speaker 1: our honey harvest, but it broke down the last two years.

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Speaker 1: But it's kind of you know, it's kind of like

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Speaker 1: this older eclipse. Um uh, if you go outside and

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Speaker 1: beat a drama and we'll go away. Correlation but zero causality. Gary,

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Speaker 1: Thank you very much, Scariously the President a Gary Shilling

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Speaker 1: beekeeper as well a purveyor of fine honey. We get

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Speaker 1: to some every year here at Bloomberg, David Greg, Carol

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Speaker 1: Master in for tonkey In. This is Bloomberg. You are

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Speaker 1: listening to Bloomberg Surveillance. Carol Masser along with David Gore.

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Speaker 1: I'm in for Tom Keane. Now. Last night, of course,

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Speaker 1: we heard from President Trump at the Phoenix Convention Center,

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Speaker 1: delivering really kind of an angry and forceful defense of

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Speaker 1: his response to what went on in Virginia. Also talking

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Speaker 1: about NAFTA, uh and building the wall. We want to

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Speaker 1: bring in Chuck Gabriel as president and founder of Capital

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Speaker 1: Alpha Partners. He's joining us on our phone lines. Check

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Speaker 1: a friend of Bloomberg Surveillance. Nice to have you back

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Speaker 1: with us. Your initial take on what we got from

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Speaker 1: the president. This was not Donald Trump on prompter? Was it? Uh?

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Speaker 1: Totally unreconstructed Trump for sure. Uh. He doubled down, you know,

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Speaker 1: he defended his ambiguous statements thought about the charlotte Ville

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Speaker 1: violence cact. The media attacked the two Arizona senators and

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Speaker 1: the Senate majority leader, and he pledged to shut down

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Speaker 1: the government necessary to secure of border wall funding. So,

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Speaker 1: you know, yesterday we were seeing the markets react to

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Speaker 1: a positive, very professionally delivered speech on Monday that showed

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Speaker 1: that he could rely on a very competent national security

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Speaker 1: team uh and and change the subject if he will.

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Speaker 1: And yesterday there was a positive account from one news

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Speaker 1: source that suggested they were making progress and beginning to

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Speaker 1: sift through uh. You know, some of the revenue offsets

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Speaker 1: to lower attach rates, but that was very much overstated.

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Speaker 1: So you know, we call them happy campers yesterday for

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Speaker 1: all kinds of reasons we could get into, but not

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Speaker 1: so much today. This is that best might provoke a

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Speaker 1: sie in the markets. We guess, well, check. This is

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Speaker 1: what you've got to do, just like investors have to do. Right.

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Speaker 1: We have to sift through what we get from President

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Speaker 1: Trump and his team. And sometimes when it's constrained, President Trump,

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Speaker 1: and sometimes when it's not. You've got to give advice

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Speaker 1: to the financial institutions that you talked to, What do

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Speaker 1: you tell them at this juncture, because we do get

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Speaker 1: such different tones, if you will, out of this administration,

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Speaker 1: and we tell him not to take it too seriously,

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Speaker 1: but also be girded for particularly very shoppy September Carroll,

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Speaker 1: because obviously we have the decisions that have to be

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Speaker 1: made to fund the government, extend the debt limit, and

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Speaker 1: the President doesn't seem likely to be lining up to

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Speaker 1: be very helpful on that score. In other words, he

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Speaker 1: might be a leg weight that Mitch McConnell and speak

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Speaker 1: of Ryan and others have to wear as they is

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Speaker 1: to move through that process. He's instinctively going back to

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Speaker 1: his space. But what we tell investors is the real

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Speaker 1: hope for taxife lies with Congress, not the White House.

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Speaker 1: So the President doesn't really have to play a heroic role,

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Speaker 1: just a less destructive one. Well, as we talk about roles,

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Speaker 1: let me bring up this article that was in the

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Speaker 1: New York Times this morning by Jonathan Martin and Alex Burns,

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Speaker 1: focusing on that relationship between the President and the Senate

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Speaker 1: Majority leader, painting a pretty bleak picture of the state

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Speaker 1: of that relationship. The two gentlemen haven't spoken in a

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Speaker 1: matter of weeks. There's a lot of animosity between them.

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Speaker 1: How problematic is that? Again, as you look at this

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Speaker 1: agenda that lawmaker's face when they get back to Washington

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Speaker 1: at the beginning of Tember. I think it can be overstated.

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Speaker 1: It's interesting that the president, you know, attack Jeff Lake

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Speaker 1: and Senator McCain, the two Arizona senators. But you know,

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Speaker 1: he just basically said, talked to Mitch. Talked to Mitch.

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Speaker 1: So he has to work with McConnell. Uh, somebody within

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Speaker 1: his inner circle has to be telling him that there

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Speaker 1: are all kinds of problems that McConnell is dealing with

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Speaker 1: with a very narrow fifty eight Senate majority. And then

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Speaker 1: that one defection in the end from Senator McCain. So,

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Speaker 1: you know, and McConnell gave the president his one big

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Speaker 1: achievement legislative achievements so far in changing the filibuster rules

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Speaker 1: to actually help confirm uh, you know, our new Supreme

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Speaker 1: Court justice, Mr Corsich. So I you know, again, it's

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Speaker 1: it's interesting to watch. It makes for great, great, uh great,

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Speaker 1: great alarmist news articles. But on the other hand, they're

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Speaker 1: going to have to work together. And unfortunately, this what

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Speaker 1: this could point to is the president's belief that his

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Speaker 1: all over the next few weeks and months could be

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Speaker 1: just to criticize and control the Congress using the stick,

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Speaker 1: if you will, to try to get his way, and

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Speaker 1: that that will not be helpful with a thousand questions.

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Speaker 1: You know, one thing I wondered about, check is the

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Speaker 1: role of Mike Pence and all of this. I feel

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Speaker 1: like we all are driven, uh, you know, and attracted

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Speaker 1: to the shiny things in the room when it comes

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Speaker 1: to this new administration. Mike Pence is pretty quiet the

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Speaker 1: vice president, but he's been pretty key, uh in I

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Speaker 1: think shaping policy behind closed doors and also in the

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Speaker 1: communication interactions, the relationships with Congress. How important is kind

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Speaker 1: of Mike Pence in moving any kind of legislation forward here,

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Speaker 1: whether it's tax reform or other. I do think he

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Speaker 1: played a very important role. Carroll. It's a great point.

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Speaker 1: And it's interesting, you know, one of the things we gauge.

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Speaker 1: We talked institutional investors a lot, and you know, we've

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Speaker 1: had one or two that has sort of tried to

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Speaker 1: game what a tense administrate ship might look like if

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Speaker 1: anything were to happen to the president, and God, actually

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Speaker 1: we're a long way from anything like that ever happening.

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Speaker 1: But it's interesting they sought to sort of gain this

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Speaker 1: general notion that's out there in the markets that are

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Speaker 1: you know that a pense administration might not be so

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Speaker 1: bad because he does have those positive relations with the Congress.

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Speaker 1: Uh and uh, you know thinks like a House of

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Speaker 1: House Freedom Caucus guy. He was head of the Republican

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Speaker 1: Study Committee, which is the forerunner to the House Freedom Caucus.

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Speaker 1: So I think they're important. And obviously, you know, you

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Speaker 1: have an omb director that was a former House Republican

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Speaker 1: and uh very senior House Republican in Mt. Nilvaney, So

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Speaker 1: they shouldn't have any dearth of ways to communicate with

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Speaker 1: the Congress. It's just that, you know, the president's style

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Speaker 1: is stugilistic, confrontational if you will, and he continues to

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Speaker 1: go back to his base. But Pence is a really

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Speaker 1: really key player for sure. That's a good point to

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Speaker 1: also about the president going constantly kind of back to

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Speaker 1: his base. He loves rallies, he loves being on the

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Speaker 1: campaign trail. I get that, at think we all get that.

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Speaker 1: Is he though an effective leader in some regard by

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Speaker 1: doing so well, he could become one again if he

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Speaker 1: if he could just find a way to sprinkle in

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Speaker 1: some beginnings of salesmanship on you know, the need to

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Speaker 1: to you know, to to change the tax code in

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Speaker 1: order to make America great again, and to try to

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Speaker 1: sort of begin some appreciation among his base and the

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Speaker 1: Republican base for why we need to, you know, to

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Speaker 1: make corporate tax changes and to you know, to absorb

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Speaker 1: some tough ones to get there. So, you know, he's

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Speaker 1: not helpful when he's when he's changing the subject to

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Speaker 1: issues that you know, as much as as often as

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Speaker 1: not seen about him and his his his problems with

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Speaker 1: the New York Times and you know, and and the

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Speaker 1: Post and others the media in particular, and in sort

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Speaker 1: of personal peak towards some of the individual members. He

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Speaker 1: can become a very positive force again. But again, our

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Speaker 1: our view is we're wanting to get tax reform, and

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Speaker 1: that's mostly because Congress will drive it. So we think

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Speaker 1: articles like that, the one the other day that suggested

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Speaker 1: that the White House is beginning to narrow down tradeoffs

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Speaker 1: and to make progress working with the Congress very much

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Speaker 1: over states the difficulty will have to go through September October,

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Speaker 1: and then how ultimately Congress will have to make the

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Speaker 1: touch decisions itself. Chuck, You look at the market movement

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Speaker 1: last night, whether it's in the currency market and the

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Speaker 1: futures markets, as the President spoke, It makes me wonder

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Speaker 1: what you tell an institutional investor who doesn't know who

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Speaker 1: he should be listening to on the issue of trade,

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Speaker 1: for instance, it seems like we now know we're supposed

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Speaker 1: to be listening to to Secretary Commerce Wilba Ross and

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Speaker 1: to Robert Leitheiser on the issue the death ceiling. It

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Speaker 1: seems like we haven't trained to listen to the Treasury

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Speaker 1: secretary and to Gary Cone, the head of the NBC

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Speaker 1: as well. But you have the President interjecting on these issues,

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Speaker 1: and clearly investors feel like they have to give that

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Speaker 1: some credence. How much credence do you give what the

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Speaker 1: president has to say on these important issues, David? How

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Speaker 1: do you how do you write a playbook for administration

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Speaker 1: officials who you have to essentially play along with the

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Speaker 1: message pay no attention to that man behind the curtain. Um,

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Speaker 1: you know, I think Wall Street understands that, as Miss

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Speaker 1: McConnell said, there will be a debt showing extension, so

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Speaker 1: they can see beyond that. But on the other hand,

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Speaker 1: when the President says he's willing to shut down the

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Speaker 1: government if necessary to force funding of a border wall.

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Speaker 1: You know that that's just beginning to reinforce what what

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Speaker 1: I can think smart people have been anticipating all along

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Speaker 1: is ex September is going to be a very chopping month.

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Speaker 1: So there is sort of Trump the populist who could

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Speaker 1: be even more effective to be attained, Trump the evangelist

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Speaker 1: for positive parts of his agenda versus the you know,

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Speaker 1: the blocking and tackling that his cabinet and agency officials

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Speaker 1: have to endure to actually run the government. You've got

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Speaker 1: the members of the Big Six as they're called, two

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Speaker 1: members from the House, the Senate, and the Administration kind

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Speaker 1: of crossing the country now. Talking about tax reform. The

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Speaker 1: House Speaker Paul Ryan is I think on the Intel

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Speaker 1: campus in Oregon today talking about the taxi form there.

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Speaker 1: What are you gonna be looking for when we finally

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Speaker 1: get a proposal, a plan from from the White House.

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Speaker 1: We've been operating from this Ryan Brady blueprint for some time. Now,

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Speaker 1: where are your eyes gonna want it? What are you

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Speaker 1: gonna be looking for when we finally get that document,

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Speaker 1: the document I presume which will be longer than the

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Speaker 1: one page we've gotten so far, Well, it might be longer,

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Speaker 1: but I think it's wrong to anticipate a document from

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Speaker 1: the White House. I mean, that didn't work well with

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Speaker 1: the American Healthcare Act, you know, when the Republicans tried

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Speaker 1: to move sort of a pre agreed to Obamacare repeal bill. Uh,

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Speaker 1: and that that very skimpy statement of principles from you know,

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Speaker 1: the key players on taxi for me and two of them,

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Speaker 1: the White House officials last month, kind of signaled that

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Speaker 1: they're starting off from a very very base level. So

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Speaker 1: I really don't think we should look for a White

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Speaker 1: House proposal and ultimately where we're heading. It really does

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Speaker 1: discard what I would call the two point oh Brady

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Speaker 1: Ryan play, and that actually avoided the tough deficsions we

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Speaker 1: are now going to have to face with regards the

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Speaker 1: mortgage interest deduction, state and local tax deductions, et cetera.

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Speaker 1: We could have avoided all that if we just merely

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Speaker 1: accepted a border tax or you know, the repeal of

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Speaker 1: that corporate and interest deductibility. Because those have now largely

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Speaker 1: been rejected formally rejected, we have to go through this

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Speaker 1: exercise of going back to look at the tax trade

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Speaker 1: offs that were in the Camp build David Camp formally

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Speaker 1: and means chairman back in two thousand fourteen. And that

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Speaker 1: really is the working template, certainly in the Senate Finance Committee,

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Speaker 1: and even apparently based on the article we were reacting

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Speaker 1: to yesterday positively. Uh, you know, that's apparently already the

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Speaker 1: major template for discussion among all the Big six negotiators. Hey,

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Speaker 1: if we relate some of this back chuck to the

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Speaker 1: financial markets. If I look at the financials specifically among

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Speaker 1: the LaGG or did you look at the major industry

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Speaker 1: groups in the S and P still up about six

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Speaker 1: point three um, but other names and other groups have

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Speaker 1: done a heck of a lot better. We have seen

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Speaker 1: kind of a little bit of a rally though, from

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Speaker 1: about early June in financials. Um. I guess I'm thinking

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Speaker 1: about investors trying to figure out what what's the environment.

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Speaker 1: We have seen some regulations starting to roll back, but

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Speaker 1: there's a lot more that could be done. Um. And

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Speaker 1: obviously interest rates playing into all of this. What's what's

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Speaker 1: the outlook for those names specifically in terms of policy

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Speaker 1: regulations out of Washington? Yeah, that the rally and financials

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Speaker 1: is long overdue, and and you know, they escaped the

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Speaker 1: worser faith so to speak, had had Trump not one.

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Speaker 1: So you know, there was sort of a four part

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Speaker 1: argument for rotation in the financials at the elections, and

429
00:22:42,480 --> 00:22:44,320
Speaker 1: it was, you know about how we were going to

430
00:22:44,680 --> 00:22:47,320
Speaker 1: start seeing the FED raise rates, uh, and so we're

431
00:22:47,320 --> 00:22:50,119
Speaker 1: gonna have higher net interest margins. We were going to

432
00:22:50,240 --> 00:22:53,800
Speaker 1: have the regulation for sure, and that's the one thing

433
00:22:53,840 --> 00:22:56,200
Speaker 1: that really has been tangible, and an interest from margins

434
00:22:56,280 --> 00:22:58,800
Speaker 1: really haven't been there so far. And then we've got

435
00:22:58,840 --> 00:23:01,960
Speaker 1: to see lower corporate attached rates and you know, particularly

436
00:23:01,960 --> 00:23:05,679
Speaker 1: the smaller you get, the higher attacks you pay effect

437
00:23:05,720 --> 00:23:08,440
Speaker 1: attacks you pay as a bank. But he would actually

438
00:23:08,440 --> 00:23:11,560
Speaker 1: just even just lower the race to that would get

439
00:23:11,560 --> 00:23:14,119
Speaker 1: a lot of the banks to have a really a

440
00:23:14,119 --> 00:23:16,639
Speaker 1: bit of a dividend, and then you were hoping for

441
00:23:16,840 --> 00:23:19,159
Speaker 1: longer term growth. You know, those are sort of the

442
00:23:19,160 --> 00:23:22,040
Speaker 1: four elements of rotation and the financials, and so far

443
00:23:22,119 --> 00:23:26,119
Speaker 1: the only one that's been real has been the regulation.

444
00:23:26,280 --> 00:23:28,760
Speaker 1: So but I do think this could be a multi

445
00:23:28,840 --> 00:23:31,840
Speaker 1: year positive story kind of like we had in the

446
00:23:31,840 --> 00:23:34,639
Speaker 1: mid nineties for financials. And you know, some of my

447
00:23:34,680 --> 00:23:36,760
Speaker 1: friends like Mike Mayo I used to work with and

448
00:23:36,920 --> 00:23:39,440
Speaker 1: make crudential has even become a bull again. I think

449
00:23:39,480 --> 00:23:42,080
Speaker 1: that only happens every couple of decades. Chuck, thank you

450
00:23:42,160 --> 00:23:44,040
Speaker 1: very much, appreciate the perspective this point. Chuck Capital with

451
00:23:44,119 --> 00:23:56,480
Speaker 1: Capital Health of Partners on our phone lines. Tavi Dury

452
00:23:56,560 --> 00:23:58,960
Speaker 1: with Carol Masster today on Bloomberg Surveillance Time. Keen is

453
00:23:58,960 --> 00:24:00,920
Speaker 1: on vacation this week, and that we have there's some

454
00:24:00,920 --> 00:24:02,800
Speaker 1: new data from the e I a little later this morning,

455
00:24:02,920 --> 00:24:05,720
Speaker 1: some energy data. Jacques Rusou joins us now on our phone, Lee,

456
00:24:05,760 --> 00:24:07,840
Speaker 1: because the managing director in charge of global oil and

457
00:24:07,960 --> 00:24:11,960
Speaker 1: natural Gas for clear View Energy Partners. Let's start broad

458
00:24:11,960 --> 00:24:13,959
Speaker 1: if we could hear Jacques, what's driving oil prices at

459
00:24:14,000 --> 00:24:16,760
Speaker 1: this point? Well, I think you need to take a

460
00:24:16,800 --> 00:24:19,440
Speaker 1: step back and say, you know, what was opex goal

461
00:24:19,640 --> 00:24:24,280
Speaker 1: when they decided to um start a production cut, and

462
00:24:24,320 --> 00:24:26,600
Speaker 1: the first one was to balance the oil market with

463
00:24:26,680 --> 00:24:28,880
Speaker 1: supply and demand, and that happened in the second quarter

464
00:24:28,920 --> 00:24:31,879
Speaker 1: of this year. The next one was to reduce inventories,

465
00:24:32,320 --> 00:24:35,200
Speaker 1: and that one's a little bit trickier because the inventories

466
00:24:35,240 --> 00:24:38,200
Speaker 1: that we can easily count are in the O E

467
00:24:38,280 --> 00:24:41,639
Speaker 1: C D countries and they've stayed relatively flat but a

468
00:24:41,680 --> 00:24:45,160
Speaker 1: lot of other inventories around the world have started to decline,

469
00:24:45,240 --> 00:24:48,440
Speaker 1: so that part of opec strategy has begun to work.

470
00:24:49,119 --> 00:24:51,600
Speaker 1: But the point that I think is most important is

471
00:24:51,640 --> 00:24:55,280
Speaker 1: that there is a strong seasonality of demand in the world,

472
00:24:55,400 --> 00:24:59,200
Speaker 1: global oil demand, and the world uses one point five

473
00:24:59,320 --> 00:25:01,800
Speaker 1: million barrel for day more oil in the second half

474
00:25:01,800 --> 00:25:03,240
Speaker 1: of the year than the first half of the year.

475
00:25:03,480 --> 00:25:07,000
Speaker 1: And this is just seasonal more driving around the world.

476
00:25:07,840 --> 00:25:11,200
Speaker 1: So this is opex big chance that if they can

477
00:25:11,560 --> 00:25:14,760
Speaker 1: keep their production down in demand rises in the second

478
00:25:14,800 --> 00:25:17,040
Speaker 1: half of the year, then you can see a bigger

479
00:25:17,080 --> 00:25:19,640
Speaker 1: move down in inventories and and that should drive prices

480
00:25:19,640 --> 00:25:21,439
Speaker 1: a little bit higher. Shock it was It wasn't more

481
00:25:21,480 --> 00:25:23,000
Speaker 1: than just a few months ago we were having a

482
00:25:23,040 --> 00:25:26,000
Speaker 1: conversation about the relevance of of OPEC because that's has

483
00:25:26,040 --> 00:25:29,200
Speaker 1: that been restored by the fact that they fairly successfully

484
00:25:29,200 --> 00:25:33,400
Speaker 1: had this production freeze to some extent. Yes, I think

485
00:25:34,040 --> 00:25:37,439
Speaker 1: you can see they've definitely impacted the market. But when

486
00:25:37,520 --> 00:25:39,240
Speaker 1: you take a look at what's going on in the

487
00:25:39,320 --> 00:25:42,880
Speaker 1: US with rising production, that is significant, and I think

488
00:25:42,920 --> 00:25:46,520
Speaker 1: that's the biggest challenge OPEX faces is not the second

489
00:25:46,520 --> 00:25:49,040
Speaker 1: half of this year, because the higher demand. But what

490
00:25:49,160 --> 00:25:51,240
Speaker 1: happens in the first half of two thousand and eighteen

491
00:25:51,240 --> 00:25:55,160
Speaker 1: when demand is seasonally declines and there's higher production from

492
00:25:55,200 --> 00:25:58,199
Speaker 1: non Opeque countries, that's going to become a bigger challenge

493
00:25:58,200 --> 00:26:00,880
Speaker 1: for OPEC. We have a story on the Boomberg talking

494
00:26:00,880 --> 00:26:03,720
Speaker 1: about how US benchmark crude is the cheapest relative to

495
00:26:03,760 --> 00:26:07,080
Speaker 1: its global rivals in almost two years, and that could

496
00:26:07,080 --> 00:26:11,320
Speaker 1: be signaling another wave of American oil headed abroad incoming weeks.

497
00:26:11,440 --> 00:26:17,760
Speaker 1: When we look at kind of global flows of oil specifically, um,

498
00:26:17,800 --> 00:26:19,600
Speaker 1: what does it tell you? What does it mean for

499
00:26:19,680 --> 00:26:23,680
Speaker 1: investors potentially? Well, I definitely think you're seeing a lot

500
00:26:23,800 --> 00:26:27,600
Speaker 1: of rising oil production in the US, and and that's

501
00:26:27,800 --> 00:26:30,480
Speaker 1: fairly well known by the market. I think one of

502
00:26:30,520 --> 00:26:32,720
Speaker 1: the other pieces of the puzzle to think about is

503
00:26:32,760 --> 00:26:36,199
Speaker 1: that in the fall is a big refinery maintenance period

504
00:26:36,280 --> 00:26:38,919
Speaker 1: for the United States. So that means the United States

505
00:26:39,000 --> 00:26:41,520
Speaker 1: is going to use less oil. So this oil will

506
00:26:41,520 --> 00:26:43,439
Speaker 1: need to to go somewhere. Some of it will go

507
00:26:43,480 --> 00:26:45,760
Speaker 1: into storage, but just as you were saying, a lot

508
00:26:45,800 --> 00:26:48,640
Speaker 1: of it will end up getting exported. When you look

509
00:26:48,680 --> 00:26:51,879
Speaker 1: at at oil globally, at all the various hotspots, I

510
00:26:51,880 --> 00:26:54,600
Speaker 1: think about Venezuela. I think about Libya, What are we

511
00:26:54,640 --> 00:26:56,600
Speaker 1: seeing in those countries? What effect are they having on

512
00:26:56,600 --> 00:27:00,960
Speaker 1: the global price of oil at this point? Well, um,

513
00:27:01,440 --> 00:27:04,960
Speaker 1: Libya and Nigeria are very much wild cards. From one

514
00:27:05,000 --> 00:27:07,720
Speaker 1: month to the next, their production is moving up and down.

515
00:27:08,080 --> 00:27:10,840
Speaker 1: They are not part of the OPEC quotas, although OPEC

516
00:27:10,920 --> 00:27:13,560
Speaker 1: would like to bring them in at some point because

517
00:27:13,560 --> 00:27:16,479
Speaker 1: they are OPEC countries. So those are very hard to

518
00:27:16,480 --> 00:27:20,680
Speaker 1: predict because it's basically about you know, pipeline bombings in

519
00:27:21,080 --> 00:27:24,800
Speaker 1: the military actions that are going on. Venezuela is a

520
00:27:24,800 --> 00:27:27,840
Speaker 1: little bit of a different story because there is a

521
00:27:27,920 --> 00:27:31,439
Speaker 1: situation where um, they have a lot of production of

522
00:27:31,520 --> 00:27:35,680
Speaker 1: heavy oil that's easy to produce UM, but difficult to

523
00:27:35,680 --> 00:27:37,800
Speaker 1: to move and sell because a lot of the different

524
00:27:37,840 --> 00:27:41,320
Speaker 1: refiners around the world cannot even process it. UM in

525
00:27:41,400 --> 00:27:44,960
Speaker 1: with Venezuela, even though there is significant turmoil in the country,

526
00:27:45,240 --> 00:27:48,520
Speaker 1: if you take a look back historically, they've generally kept

527
00:27:48,520 --> 00:27:52,640
Speaker 1: a fairly constant level of production m albeit the one

528
00:27:52,680 --> 00:27:55,000
Speaker 1: time in the workers strike, and I think it was

529
00:27:55,040 --> 00:27:57,960
Speaker 1: two thousand two, the production actually went almost to zero.

530
00:27:58,480 --> 00:28:01,400
Speaker 1: So I wouldn't expect the see a drastic drop off

531
00:28:01,400 --> 00:28:04,480
Speaker 1: in Venezuela production, but it has been a gradual decline

532
00:28:04,520 --> 00:28:07,080
Speaker 1: and that is impacting the market we're talking about Jacquesus,

533
00:28:07,240 --> 00:28:11,640
Speaker 1: imaging director Global Oil and Gas that clear View Energy Partners. Jacques,

534
00:28:12,080 --> 00:28:14,520
Speaker 1: Obviously you focus on oil and gas, got it your

535
00:28:14,920 --> 00:28:18,080
Speaker 1: traditional energy forms if you will, how much do you

536
00:28:18,119 --> 00:28:19,919
Speaker 1: keep an eye on what's going on in the alternative

537
00:28:20,000 --> 00:28:23,800
Speaker 1: energy space? UM, we have a different analysts that are

538
00:28:23,800 --> 00:28:26,719
Speaker 1: our company that do take a look at all different

539
00:28:26,760 --> 00:28:30,280
Speaker 1: forms of energy, So it is something that that we

540
00:28:30,280 --> 00:28:32,840
Speaker 1: we focus on. And I think another piece to focus

541
00:28:32,880 --> 00:28:35,720
Speaker 1: on in that regard is efficiency. And you know, one

542
00:28:35,760 --> 00:28:38,960
Speaker 1: of the things we're seeing UM this year on the

543
00:28:39,000 --> 00:28:41,920
Speaker 1: gasoline consumption side is we're seeing a little bit of

544
00:28:41,920 --> 00:28:45,720
Speaker 1: a disconnect in the data because, um, the government is

545
00:28:45,760 --> 00:28:49,600
Speaker 1: reporting miles traveled on highways has gone up, yet gasoline

546
00:28:49,640 --> 00:28:52,760
Speaker 1: demand is staying relatively flat. And you know, you need

547
00:28:52,800 --> 00:28:54,560
Speaker 1: to see a lot of data points to really get

548
00:28:54,600 --> 00:28:56,600
Speaker 1: a look at it. But what could that mean? That

549
00:28:56,640 --> 00:28:59,720
Speaker 1: could mean that we're starting to see all the efficiency

550
00:28:59,760 --> 00:29:03,479
Speaker 1: game in terms of cafe standards and improved automobiles starting

551
00:29:03,520 --> 00:29:05,440
Speaker 1: to take hold. So I think this is a real

552
00:29:05,520 --> 00:29:09,400
Speaker 1: important variable to watch because it could end up cutting consumption,

553
00:29:09,440 --> 00:29:11,959
Speaker 1: not just in the US but globally. In mind you

554
00:29:11,960 --> 00:29:13,880
Speaker 1: you don't you don't cover companies in specific. Let me

555
00:29:13,920 --> 00:29:15,760
Speaker 1: just use some some company news as a peg to

556
00:29:15,800 --> 00:29:18,200
Speaker 1: talk about the oil industry here in the US generally.

557
00:29:18,240 --> 00:29:20,600
Speaker 1: We heard yesterday that John Watson, the CEO of Chevron

558
00:29:20,680 --> 00:29:23,000
Speaker 1: Is is stepping down this, of course a huge integrated

559
00:29:23,520 --> 00:29:26,280
Speaker 1: oil company. What does that move say to you about

560
00:29:26,320 --> 00:29:29,320
Speaker 1: the direction of companies like like Chevron. We look back

561
00:29:29,360 --> 00:29:31,040
Speaker 1: at his tenure. I guess he was in the job

562
00:29:31,080 --> 00:29:33,440
Speaker 1: for eight years. Um does it? Does it give you

563
00:29:33,480 --> 00:29:35,560
Speaker 1: any indication of where things are headed with these big

564
00:29:35,680 --> 00:29:39,880
Speaker 1: energy conglomerates in the US. I actually worked for Mobile

565
00:29:39,920 --> 00:29:42,480
Speaker 1: Oil in the nine nineties, and you know, one of

566
00:29:42,480 --> 00:29:44,880
Speaker 1: the things I learned from being in these large companies

567
00:29:44,960 --> 00:29:48,600
Speaker 1: is that they're very well organized and very well structured

568
00:29:48,640 --> 00:29:52,520
Speaker 1: in terms of the management succession planning. So this is

569
00:29:52,560 --> 00:29:55,000
Speaker 1: something where you know, Mr Watson has been there since

570
00:29:55,120 --> 00:29:58,280
Speaker 1: nineteen eighty that this isn't something you know coming out

571
00:29:58,280 --> 00:30:01,080
Speaker 1: of the blue. And I think way you can see

572
00:30:01,120 --> 00:30:05,920
Speaker 1: that is that Mike Worth who was appointed vice chairman

573
00:30:05,960 --> 00:30:08,840
Speaker 1: in February, so that was a signal that he was

574
00:30:08,960 --> 00:30:12,800
Speaker 1: the next one in line for the role. So I

575
00:30:12,800 --> 00:30:15,040
Speaker 1: wouldn't take too much out of it in terms of,

576
00:30:15,480 --> 00:30:18,640
Speaker 1: you know, any sort of big change in how the

577
00:30:18,680 --> 00:30:21,360
Speaker 1: companies are operating this. This is kind of just the

578
00:30:21,400 --> 00:30:24,520
Speaker 1: way these big oil companies work. Energy names in the

579
00:30:24,640 --> 00:30:27,960
Speaker 1: S and P five as a whole overall down about

580
00:30:28,000 --> 00:30:31,880
Speaker 1: seventeen point six percent so far in When you look

581
00:30:31,920 --> 00:30:34,280
Speaker 1: at the investment space, how do you play it as

582
00:30:34,320 --> 00:30:39,080
Speaker 1: an investor? Well, we don't recommend individual stock to clear view,

583
00:30:39,160 --> 00:30:41,720
Speaker 1: but I think one of the things to think about

584
00:30:41,720 --> 00:30:45,040
Speaker 1: two is on the oil price front, what what is

585
00:30:45,080 --> 00:30:47,520
Speaker 1: this all telling you? Um, you know, I do think

586
00:30:47,520 --> 00:30:49,320
Speaker 1: we'll see a little bit of a pop an oil

587
00:30:49,320 --> 00:30:51,239
Speaker 1: price in the second half of this year, as I

588
00:30:51,320 --> 00:30:55,320
Speaker 1: was mentioning, because of seasonally rising demand. But bigger picture,

589
00:30:55,360 --> 00:30:57,560
Speaker 1: what investors are looking at is that there's a lot

590
00:30:57,600 --> 00:30:59,600
Speaker 1: of supply out there, and there's a lot of supply

591
00:30:59,640 --> 00:31:02,720
Speaker 1: in the US, and so if you take a look

592
00:31:02,760 --> 00:31:04,960
Speaker 1: at what the forward curves are telling you on the

593
00:31:05,000 --> 00:31:07,120
Speaker 1: oil market, is that you know, we're going to be

594
00:31:07,200 --> 00:31:10,200
Speaker 1: in this range bound period for for a while, and

595
00:31:10,240 --> 00:31:13,400
Speaker 1: I think that makes difficult for for many of the

596
00:31:13,480 --> 00:31:17,320
Speaker 1: energy Something news about HP bulletin yesterday they're going to

597
00:31:17,360 --> 00:31:20,040
Speaker 1: be offloading a lot of their shale properties. And I

598
00:31:20,080 --> 00:31:22,440
Speaker 1: wonder if we could talk broadly here about the state

599
00:31:22,480 --> 00:31:25,440
Speaker 1: of of of of shale here in the US. Obviously

600
00:31:25,480 --> 00:31:29,120
Speaker 1: we see the price of oil covering around a barrel.

601
00:31:29,160 --> 00:31:31,680
Speaker 1: How attractive are those parcels of land going to be?

602
00:31:32,080 --> 00:31:35,800
Speaker 1: How attractive is US shale at this point? Well, I

603
00:31:35,800 --> 00:31:38,680
Speaker 1: guess there's a few different things to think about here. Um.

604
00:31:38,920 --> 00:31:42,000
Speaker 1: One of them would be the fact that the market

605
00:31:42,720 --> 00:31:46,400
Speaker 1: usually doesn't like conglomerate companies as much, so to to

606
00:31:46,520 --> 00:31:50,760
Speaker 1: separate a mining business from an oil and gas business

607
00:31:50,880 --> 00:31:54,720
Speaker 1: is probably beneficial, um in terms of the shale in general.

608
00:31:54,960 --> 00:31:57,000
Speaker 1: You know, I think one of the interesting data points

609
00:31:57,000 --> 00:31:59,480
Speaker 1: out there now is that we have seen the flattening

610
00:31:59,480 --> 00:32:03,120
Speaker 1: out of the rig count because when oil price started

611
00:32:03,160 --> 00:32:06,080
Speaker 1: to move up, the rigs started to go to work

612
00:32:06,280 --> 00:32:10,560
Speaker 1: and significantly increased. However, over the course of the last month,

613
00:32:10,600 --> 00:32:13,560
Speaker 1: as oil price has you know, stabilized in the fifty

614
00:32:13,560 --> 00:32:15,400
Speaker 1: dollar range, give or take a little bit, you have

615
00:32:15,600 --> 00:32:18,440
Speaker 1: seen a flattening of rig counts. And the reason this

616
00:32:18,520 --> 00:32:22,080
Speaker 1: is really significant is that if you take a look globally,

617
00:32:22,600 --> 00:32:26,600
Speaker 1: the International Energy Agency is saying two thou eighteen, demands

618
00:32:26,600 --> 00:32:28,920
Speaker 1: going to go up about one point four million barrels

619
00:32:29,000 --> 00:32:33,160
Speaker 1: per day. But so is supply outside of OPEC, most

620
00:32:33,200 --> 00:32:35,800
Speaker 1: of that from the United States. So if the United

621
00:32:35,840 --> 00:32:38,840
Speaker 1: States does not end up putting enough rigs to work

622
00:32:39,000 --> 00:32:42,400
Speaker 1: and generating enough supply, then that could cause a little

623
00:32:42,400 --> 00:32:44,560
Speaker 1: bit of a shortfall in the world. You're talking just

624
00:32:44,600 --> 00:32:46,320
Speaker 1: about a thirty minutes time. We're going to get the

625
00:32:46,360 --> 00:32:50,000
Speaker 1: weekly Petroleum Status support from the U s. Energy Information Administration.

626
00:32:50,040 --> 00:32:51,680
Speaker 1: What are you gonna be looking for in that in

627
00:32:51,720 --> 00:32:53,320
Speaker 1: that report that we get that we get on a

628
00:32:53,360 --> 00:32:57,600
Speaker 1: weekly basis. Sure, we've seen a great trend of declining

629
00:32:57,960 --> 00:33:02,040
Speaker 1: oil inventories. Um it's actually been very significant. It's been

630
00:33:02,080 --> 00:33:05,280
Speaker 1: about seventy million barrels starting in the beginning of the

631
00:33:05,320 --> 00:33:08,640
Speaker 1: second quarter and into the third quarter. Some of this

632
00:33:08,720 --> 00:33:12,240
Speaker 1: is seasonal, but it is showing the impact of what

633
00:33:12,320 --> 00:33:16,040
Speaker 1: OPEC is doing. Because not only have we seen oil

634
00:33:16,240 --> 00:33:20,320
Speaker 1: go down in that timeframe, and that's represents about of

635
00:33:20,360 --> 00:33:25,000
Speaker 1: what inventories are, we've also seen a tickdown in gasoline

636
00:33:25,000 --> 00:33:29,320
Speaker 1: inventories and distillate inventories, which is the diesel category. I

637
00:33:29,360 --> 00:33:32,320
Speaker 1: mentioned Venezuela glancingly in the last block. Let me bring

638
00:33:32,320 --> 00:33:34,200
Speaker 1: it up again here. There's been a lot of speculation

639
00:33:34,280 --> 00:33:36,040
Speaker 1: that when you look at the tools that the US

640
00:33:36,080 --> 00:33:38,920
Speaker 1: presidential administration, that the Treasure Department has at its disposal,

641
00:33:38,960 --> 00:33:42,440
Speaker 1: one might be freezing oil exports from Venezuela. What kind

642
00:33:42,440 --> 00:33:44,840
Speaker 1: of effect would that have on the global energy marketplace

643
00:33:44,880 --> 00:33:46,360
Speaker 1: if that were in fact to have, not saying that

644
00:33:46,400 --> 00:33:48,520
Speaker 1: it will, but again, it's something that's been floated here

645
00:33:48,520 --> 00:33:53,440
Speaker 1: in conversations about how the US might take action against Venezuela. Yeah,

646
00:33:53,440 --> 00:33:58,120
Speaker 1: I guess there's a few different pieces of what could happen. Um. Venezuela,

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Speaker 1: as I mentioned before, produces a lot of heavier oil,

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00:34:01,360 --> 00:34:04,240
Speaker 1: and what they do is they take lighter oil that

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00:34:04,360 --> 00:34:06,960
Speaker 1: they import from places like the United States and they

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00:34:07,000 --> 00:34:10,040
Speaker 1: blend that together to to make it easier to ship

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00:34:10,040 --> 00:34:12,920
Speaker 1: and easier to sell oil. So if the United States

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00:34:12,920 --> 00:34:16,920
Speaker 1: stopped sending them light oil, that could cause Venezuela some problems.

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Speaker 1: Of course, they could end up procuring that oil from

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Speaker 1: somebody else, but it would take some logistics involved. Secondarily,

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00:34:24,160 --> 00:34:28,600
Speaker 1: the United States could stop accepting Venezuela oil into our country,

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00:34:29,120 --> 00:34:33,080
Speaker 1: and that would have some problem for the complex refiners

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00:34:33,080 --> 00:34:37,120
Speaker 1: in the Gulf Coast because this lower quality oil can

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00:34:37,160 --> 00:34:41,360
Speaker 1: only be used by certain refiners that have invested significantly

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Speaker 1: in equipment like cokers to process this oil. So if

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Speaker 1: they were not allowed to purchase this oil, they would

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Speaker 1: have to find this lower quality oil somewhere else, maybe

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00:34:51,080 --> 00:34:54,120
Speaker 1: more from Canada. UM, there's a few other countries that

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Speaker 1: could make it come through. But to to kind of

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Speaker 1: answer your question, UM, oils oil and it will end

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Speaker 1: up somewhere around the world. It could cause a temporary

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Speaker 1: UM spike and prices, but everything will readjust in terms

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Speaker 1: of the supply moving from you know, one country to another.

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Speaker 1: Oil is oil. We'll leave it there, Jacquess, So thank

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Speaker 1: you very much for the time. To Jacquist, the managing

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Speaker 1: director Global Oil and Natural Gas and Clearview Energy Partners,

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Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

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Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

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Speaker 1: platform you prefer. I'm on Twitter at Tom Keene David Gura.

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Speaker 1: Is that David Gura? Before the podcast? You can always

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Speaker 1: catch us worldwide. I'm Bloomberg Radio